RLJ Entertainment: New Credit Facility Should Alleviate Cash Flow Issues10 Nov, 2014 By: Erik Gruenwedel
Distributor narrows third-quarter fiscal loss despite backlog of packaged-media backorders
To make money you have to spend money. RLJ Entertainment says a new $70 million credit facility should improve cash flow by $15 million through the end of the year.
RLJ Entertainment, which was formed by the merger of Acorn Media Group and Image Entertainment in 2012, said the new funding would help it address “legacy past-due payables” and other operating investments that have been deferred.
Specifically, the Silver Springs, Md.,-based distributor said direct-to-consumer revenue decreased $1.3 million in the third quarter (ended Sept. 30) compared with the previous-year period. The decrease was due to lower catalog sales of $2.3 million, resulting from increased backorders of discs that did not ship during the quarter due to limited availability of cash to replenish inventory levels.
On the positive side, revenue growth from proprietary subscription video-on-demand (SVOD), primarily Acorn TV, increased to $1.1 million. Acorn TV, which was one of the first SVOD services available in the United States beyond Netflix and Amazon Prime Instant Video, features predominantly British fare such as TV shows and movies. It ended the period with more than 112,000 subscribers.
RLJ Entertainment just launched urban-themed SVOD service “Urban Movie Channel,” or UMC.
Revenue in the quarter increased $4.4 million (13.4%) to $37.1 million, compared with revenue of $32.7 million a year ago. The increase was driven by the release of the current season of the “Foyle's War” and offset by a decrease in revenue in the wholesale segment. Net loss decreased nearly 9% to $7.8 million.
"The business delivered a strong performance in the quarter with [pre-tax earnings] increasing 77% and revenue growing 27%, when you exclude items related to our terminated feature film output deal. Our cost containment initiatives continue to work by delivering reductions in SG&A year over year,” CEO Miguel Penella said in a statement.